Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points under your existing one? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a number of benefits that will often make it worth the initial cost many times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and mortgage payment , perhaps considerably. Additionally, you might be given the option of tapping into the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage, giving you the ability to build up your equity faster.
All of these benefits do cost something, though. You'll be charged the same sort of fees as you did with your present mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can get you a lower interest rate. The money you will save over the life of the mortgage loan may be significant if you've paid up front about three percent of the new loan balance. You might hear that these points may be deducted on your income taxes, but as tax regulations can be ever-changing, please speak with your tax professional before depending on this.
Another thing about taxes is that once your interest rate is reduced, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers take into consideration. Call us at 405-321-5363 to help you do the math.
Most people find that the monthly savings quickly outweigh the up-front expenses of refinancing. We can help you find out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 405-321-5363 to get you started.
Want to know more about refinancing your home? Call us: 405-321-5363.